On February 12, US January nonfarm payrolls rose by 130,000, significantly exceeding market expectations of 70,000 and marking the largest gain since April 2025. The unemployment rate declined to 4.3% (vs. 4.4% expected), the lowest level since August 2025. Average hourly earnings increased 0.4% month-on-month, the average workweek rose to 34.3 hours, and the labor force participation rate edged up to 62.5%.
Sector-wise, healthcare added 82,000 jobs and construction gained 33,000, while manufacturing returned to positive territory with an increase of 5,000 jobs. However, federal government employment declined by 34,000.
Following the release, rate futures were repriced, with traders pushing the expected timing of the first rate cut from June to July. This shift aligns with recent hawkish commentary. Kansas City Fed President Schmid supported keeping rates at “some degree of restrictiveness,” warning that premature easing could prolong inflation persistence. Meanwhile, White House economic advisors emphasized that upcoming inflation data will be decisive, while still acknowledging room for rate cuts.
It is also worth noting that November and December payrolls were revised down by a combined 17,000, and the annual benchmark revision showed a substantial downward adjustment of nearly 898,000 jobs. This suggests that underlying labor momentum over the past year has been weaker than headline figures implied. Total job growth for 2025 was only 181,000, averaging roughly 15,000 per month, indicating a still-fragile foundation.
Overall, this report reinforces the narrative of “no rush to ease in the short term.” However, market focus has now shifted to the upcoming CPI release. Should inflation reaccelerate, the period of elevated rates could be extended further. Conversely, if both labor resilience and inflation soften simultaneously, conditions for a mid-year easing cycle could re-emerge.
